Despite Flipkart's sale to Walmart for a whopping $16 billion, there's still a huge opportunity gap in India's startup ecosystem, says Nitin Rai, chairman of the board of trustees of TiE Global, a Silicon Valley nonprofit that supports startups through networking, mentoring and helping with fundraising. He says many entrepreneurs don't have equal access to capital that would benefit India's wider economy.

TiE (The Indus Entrepreneurs) was founded in 1992 by professionals like Rai who have connections to the Indus region. In addition to his work with TiE, Rai also runs Elevate Capital, a venture capital fund in Portland, Oregon, that does early-stage investments with a focus on companies led by women, minorities and veterans.

I spoke with Rai at TiE,'s global summit in New Delhi late last month. In a freewheeling conversation, he spoke about how entrepreneurship should be used to pull millions out of poverty and the challenges of doing business in India. These are edited excerpts from the conversation.

BAHREE: What is the role that TiE plays today?

RAI: The mission of TiE, when it started, was to help underserved entrepreneurs. The concept of mentoring and tying it up with investments was unique back in the day. Now everybody's doing that, but they're focused on the next billion dollar startup, or how to create a unicorn in two years. That’s great, but that’s not what we’re about in terms of giving back. This idea of doing good and making money, it's already there. It's how do you activate that. People learn by example. We have to set the example and people will come.

What are the challenges faced by your members in India?

The challenges here are no different than the challenges we see elsewhere. India is at the cusp. Our members now have access to capital at the seed level. The question is, is there enough capital? If you compare to the U.S. that has far more angel investments, far more investment size, in India, it's not there yet, but it's coming.

Is it a risk appetite thing?

It's definitely a risk appetite thing. I run global angels, and I get Indian companies, and I say why don’t you go raise money from your local market? And they say, sir, investors don’t want to put any money in, they think it's too risky, they're risk averse. It's going to be a generational change. Today, Paytm founder Vijay Shekhar Sharma and Google's Vice President for South East Asia and India Rajan Anandan, all these guys are writing lots and lots of checks. But the question is, are they writing checks to people who matter the most? That I don’t know yet.

How do you define who matters the most?

It's people who are poor, who don’t have access. People are recognizing the opportunity gap--which is women, people who are excluded, so rural, from low income backgrounds, people who’ve not gone to IITs, those are the folks. Are they any less smart? No. They're all the same. We experience that in Oregon where African-American, Latino communities have been historically marginalized communities, and have their own barriers to entry, too. In India alone, there are 600 million poor people. As TiE, if we don’t look at them, my big worry is that that’s gonna create huge social problems in the future. From an India perspective, it’s the next generation. If they don’t have access to opportunity, what are they going to do? What's going to happen?

How do you think you can help them?

Just imagine if you can improve the lives of those 600 million people through entrepreneurship, just imagine. People say you create a billion-dollar company or a $100-billion company. Love that. But what if 10% of the 600 million people, or 2% of the 600 million people, created a million dollar company. Just imagine that.

How interested are foreign investors in coming into India?

It’s all about the regulatory environment. They’ve got to fix that. As long as there are those kinds of restrictions, especially on the angel investing side, guys who write $25k checks, bringing that kind of capital in. Until that issue is solved that you can move money easily and take money back easily, it's going to be a challenge for that early seed money coming in.

And that money is important?

Seed money is what germinates the business. Nobody’s going to pour in a million dollars in a very early concept stage company. You have to seed the forest. For that, you don’t need a lot of money to take that early idea to take it to the next step.

You have a software business in India. How has that experience been?

Last year, we ran into IP issues, and suffered intellectual property theft. People tried to steal business from within the company. Then, we had other trouble. We used to hire a lot of cleaners and security people through a contract firm. At some point, we decided to hire them in the company. That’s been the biggest nightmare. It’s very hard to fire them if they’re not performing. They’ll go complain to a union or bring some politician, and they’ll threaten you. We’ve been dealing with that.

That’s not the reason to not do business in India. It's more that there's no consequence in India for impropriety. People pay the cops, and get away with it. We lost a lot of money. They pretty much destroyed a business segment of the company, and we had to recreate it. We lost about two years worth of revenue, and we still haven't caught up with it. They stole our customers, while they were still working for us. And the consequence was one guy went to jail for one day. That’s it. Nothing. It took a few months to even get a First Information Report (FIR) filed. That was difficult. If I was in the U.S., and there was clear evidence of that, there would be consequences. Here, there isn’t. Everything gets dragged out.

Does this experience give you pause about doing business in India?

We’re just rolling with it. I’m very high on India. We have this tremendous potential. If we can fix corruption, if we can change the mindset of people that honesty and integrity is as important in business as it is in your personal life. Making money in business is not about squeezing someone else out of their livelihood, that kind of mindset has to change. I’m hopeful it’ll change with newer generations.